Attracting Customers

When you have a location in mind, you should work through another aspect of marketing. How will you attract customers to your business? How will you pull customers away from your competition?

It is working with this aspect of marketing that many service firms find competitive advantages. The ideas which they develop are as good and often better, than those which large companies develop with hired brains. The workblocks that follow are designed to help you think about image, pricing, customer service policies, and advertising.

Image

Whether you like it or not, your service business is going to have an image. The way people think of your firm will be influenced by the way you conduct your business. If people come to your place of business for your service, the cleanliness of the floors, the manner in which they are treated, and the quality of your work will help form your image. If you take your service to the customer, the conduct of your employees will influence your image. Pleasant, prompt, courteous service before and after the sale will help make satisfied customers your best form of advertising.

Thus, you can control your image, Whatever image you seek to develop. It should be concrete enough to promote in your advertising. For example, "service with a smile" is an often used image.

Write out what image you want customers to have of your business.

____________________

____________________

Pricing

In setting prices for your service, there are four main elements you must consider:

(1) Materials and supplies

(2) Labor and operating expenses

(3) Planned profit

(4) Competition

Further along in this Guide you will have the opportunity to figure out the specifics of materials, supplies, labor, and operating expenses. From there you may want the assistance of your accountant in developing a price structure that will not only be fair to the customer, but also fair to yourself. This means that not only must you cover all expenses but also allow enough margin to pay yourself a salary.

One other thing to consider. Will you offer credit? __________ Most businesses use a credit card system. These credit costs have to come from somewhere. Plan for them. If you use a credit card system, what will it cost you? __________

Can you add to your prices to absorb this cost?

Some trade association have a schedule for service charges. It would be a good idea to check with the trade association for your line of business. Their figures will make a good yardstick to make sure your prices are competitive.

And, of course, your prices must be competitive. You've already found out your competitors' prices. Keep these in mind when you are working with your accountant. If you will not be able to make an adequate return, now is the time to find out.

Customer Service Policies

Customers expect certain services or conveniences, for example, parking. These services may be free to the customer, but not to you. If you do provide parking, you either pay for your own lot or pick up your part of the cost of a lot which you share with other businesses. Since these conveniences will be an expense, plan for them.

List the services that your competitors provide to customers:

____________________

____________________

____________________

Now list the services that you will provide your customers:

Service / Estimated Cost

_______________ _______________

_______________ _______________

_______________ _______________

_______________ _______________

Planning Your Advertising Activities

In this section on attracting customers, advertising was saved until last because you have to have something to say before advertising can be effective. When you have an image, price range, and customers services, you are ready to tell prospective customers why they should use your services.

When the money you can spend on advertising is limited it is vital that your advertising be on target. Before you can think about how much money you can afford for advertising, take time to determine what jobs you want advertising to do for your business. The work blanks that follow should be helpful to your thinking.

The strong points about my service business are:

______________________

My service business is different from my competition in the following ways:

______________________

My advertising should tell customers and prospective customers the following facts about my business and services:

______________________

When you have these facts in mind, you now need to determine who you are going to tell it to. Your advertising needs to be aimed at a target audience - those people who are most likely to use your services. In the space
below, describe your customers in terms of age, sex, occupation, and whatever else is necessary depending on the nature of your business. This is your customer profile of "male and female automobile owners, 18 years old and above." Thus, for this repair business, anyone over 18 who owns a car is likely to need its service.

The customer profile for my business is

______________________

Now you are ready to think about the form your advertising should take and its cost. You are looking for the most effective means to tell your story to those most likely to use your service. Ask the local media (newspapers, radio and television, and the printers of direct mail pieces) for information about the services and the results they offer for your money.

How you spend advertising money is your decision, but don't fall into the trap that snares many advertisers. As one consultant describes this pitfall: It is amazing the way many managers consider themselves experts on advertising copy and media selection without any experience in these areas.

The following blanks should be useful in determining what advertising is needed to sell your strong points to prospective customers.

Say that you're the type who's beginning new small business. You Have given focus to the general opportunities for success, and
have chosen the new business you wish to establish.

What technical issues will you face in establishing the organization? How Much money will you require for beginning new small
business? Where can you obtain it? What kind of business organization does one own? Where should you find the business? (start
company tips to follow)

The very first question you need to reply is: How much money will I need? However, this question can't be answered until several
other questions are answered and many decisions are made.

To Determine how much money is needed to start a company, enter all Of your prospective income and all of your planned expenses on
a work sheet or kind.

Even though you may feel that This Type of planning is more than You have to initiate a simple small business it is beneficial to
begin with this approach to management which puts down figures in black and white. You'll find exactly the same approach valuable
within an established small business.

First, estimate your sales volume. This will depend on the total Amount of business in the region, the number and skill of
competitors now sharing that company, and your own capability to compete for the consumer's dollar. Obtain assistance in making
your sales quote from wholesalers, trade associations, your banker, and other business-people. A number of business and
statistical publications could be useful in making sales volume quotes.

In reaching your final quote of sales don't be over-enthusiastic. A brand new company generally grows slowly at the beginning.
Should you overestimate sales you are most likely to spend too much in gear and initial stock, and commit yourself to thicker
operating expenses compared to your real sales volume will justify. As you are just starting up you may have no earnings for the
first couple of months. At any rate you may expect your first few weeks to be quite low.

You must also decide what proportion of your earnings will be money And what percentage will be sold on credit. If you estimate
that a certain part of the sales are going to be on charge then you have to figure whenever you are likely to get the money for
all these sales. 1 month? Two months? More? Never?

In our guide to starting new small business, estimate how Much cash will be paid out. Bear in mind that in starting a company you
may be purchasing equipment, paying licenses and fees, which makes deposits on rent, utilities and so on, several months until you
open the doorway. A few of those expenses are simple to estimate. If you have opted to lease a building (more about this later)
then you know what your deposits will be and how much you'll need to pay out monthly. You can probably get the cost of fees,
permits and utility deposits with a couple of telephone calls.

Other expense figures might take a little more work for you. One way Is to obtain typical operating ratios for the kind of
business in which you're interested. Among the resources for such ratios include Dun & Bradstreet, Inc., trade associations,
publishers of trade magazines, technical accounting companies, industrial companies, and colleges and universities. The normal
ratios for your kind of business multiplied by your projected sales volume will serve as bench marks for estimating the several
items of expense. However, do not rely exclusively on this method for estimating each expense item. Verify and modify these
estimates through investigation and quotes in the particular market area in which you plan to operate.

Don't forget to cover yourself also. You Might Need money to live on if You have to quit your job. If your spouse is working and
may encourage the family for some time you might not need to withdraw cash from the business. The longer you can go without taking
cash out, the faster you will develop a strong cash position. Now you've estimated your money receipts and expenses, write down
the amount of money you will put into the business to start. This goes on line 1 in the case below. Next, add lines 1 and 2 for
the first month to find line 3. Then add up all the expenses to get 5. Subtract line 5 from line 3 to find line 6. This cash at
the end of month 1 then goes to line 1 to the beginning of the following month, and so on.

If you continue this for the Whole year, very shortly you will find You've got negative numbers or a negative cash flow. About
this time you'll also realize that you ought to be working on this kind with a pencil which has a good eraser.

In this overly-simplified case, you notice that from the end of June you are minus $200 in cash. Two options can be attempted -
reduce your purchases at June by $200 or begin with $200 more. You may be unable to reduce costs (they will likely go up as your
business starts). That means you will need to put in $200 more to start with. If all you have is 4000 then the extra $200 you will
need is capital you must get from somewhere else.

Do not be fooled by this very simple illustration. Many small businesses Start with the 200, and try to get the $4000 from
someplace else. Since a Major reason for failure in the early phases of a company is Under-capitalization, be very careful on your
planning at this point. You can Almost always aim on some unexpected expenses and a few flaws in anticipated income.

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